Decision looms on aid to keep ferry firm afloat

Joaquín Almunia, the European commissioner for competition, will announce on Monday (24 October) whether he will authorise state aid to SeaFrance as part of a restructuring plan for the troubled ferry company.

Commissioners discussed the case yesterday morning (19 October) and gave Almunia the authorisation to make a decision after further discussions with the French authorities.

The company, which is in receivership, is a subsidiary of France’s national rail operator, SNCF.

SNCF is ready to give SeaFrance a loan of €100 million to keep the ferry operator in business, as part of a restructuring deal worth €223m. As SNCF is state-owned, the Commission must decide whether this loan is contrary to EU rules on state aid.

Almunia is understood to favour rejecting the plan in its current form and he has the support of most of the Commission. Thierry Mariani, France’s transport minister, held talks in Brussels on Friday (14 October) to try to convince Commission officials that the plan did not breach state-aid rules.

Competition from Eurotunnel

Almunia’s spokeswoman yesterday said that a “negative decision” would be given to France on Monday if the French authorities could not come up with a solution. She indicated that the only acceptable solution would be for an “independent body” to issue a loan to the company.

The Commission also questions the future of SeaFrance. It opened its investigation in June, saying that it had doubts about the company’s prospects of long-term viability and concerns about distortions of competition.

SeaFrance has been hit hard by increased competition in the cross-Channel transport market. Jacques Gounon, the chairman and chief executive of Eurotunnel, which operates the Channel Tunnel, spoke out against the restructuring plan on Saturday (15 October), saying that it would lead to a distortion of competition and, if the Commission gave the go-ahead, would be “unfair”.

Under the restructuring plan, SeaFrance would relinquish a quarter of its fleet and make about 120 people redundant. The Danish ferry company DFDS, CFDT, a French co-operative, and Being Bang, a French company, have all expressed an interest in buying the cross-Channel operator. However, this would depend on the Commission deciding that the restructuring plan would turn SeaFrance into a viable company which would not need public support.

Kai Struckmann, a competition lawyer at White & Case in Brussels, said: “The Commission will be looking at the restructuring plan and the prospects of the company returning to viability in a reasonable time.

“They will also examine any possible compensatory measures, and this is often what these cases turn on.”He said that this was to ensure that the restructuring would not have a negative impact on the company’s competitors.

He added that the complexity of restructuring cases and the political dimension meant that negotiations were likely to continue right up until a decision is taken.